Use of CERs and ERUs

The rules on the use of project credits from JI/CDM projects (so-called Certified Emission Reductions, CERs and Emission Reduction Units, ERUs) are set out in section 8 of the Emissions Trading Act (EZG) 2011 (§35 to §38) and in Commission Regulations 2011/550/EU and 2013/1123/EU. According to the latter Regulation the maximum quantity of international project credits (CERs/ERUs) which an installation or aircraft operator may use in the period 2008-2020 has been calculated. This overall entitlement for using CER/ERU in the period 2008-2020 and the remaining entitlement for the period 2013-2020 are displayed at the account holdings of each operator and aircraft operator holding account.

In the following, the quantitative and qualitative rules are summarised which apply to the use of CERs and ERUs.

Quantitative rules

Existing installations

Existing installations falling within the scope of emission trading in the 2008 to 2012 trading period which have received an allocation may use credits in the period 2008 to 2020 up to a limit of 11 % of their allocation for 2008 to 2012. A practical example can be seen in the summary which is available in the download area below.

New installations

New entrants during the period starting in 2013, and installations not falling within the scope of the EU ETS in the period until 2012 which have thus not received an allocation, may use credits up to a limit of 4.5 % of their verified emissions in the period 2013 to 2020.

Major expansion of capacity/activities

Existing installations with a major extension of their capacity may use credits according to the rules applicable to existing installations, or up to a limit of 4.5 % of their verified emissions in the period 2013 to 2020 (depending on which of the two is the bigger amount).

Aviation

Aircraft operators may use a (not fully used) credit entitlement for 2012. In addition to that, they may use credits up to a limit of 1.5 % of their verified emissions in the period 2013-2020. Member States calculated and published each operator's international credit entitlement and informed the Commission about it after Regulation 2013/1123/EU entered into force. Credit entitlements are recalculated every year after the approval of verified emissions and the updated figures are submitted to the Commission.

Qualitative rules

Credits from nuclear projects or projects in agriculture and forestry (LULUCF) may not be used. Another restriction that has been in force since 1 May 2013 is that credits from projects for the destruction of trifluoromethane (HFC-23) and nitrous oxide (N2O) from adipic acid production may no longer be used. In addition, CERs and ERUs for emission reduction in the period 2008-2012 may no longer be used and exchanged for EU allowances. Ineligible credits are clearly marked in the Union Registry and cannot be transferred anymore to EU accounts. They can be transferred to Kyoto accounts or be canceled.

CERs and ERUs for emission reductions from the period 2008-2012 and CERs and ERUs that are not allowed according to the qualitative rules of the EU Emissions Trading Scheme may not be held in the Union Registry. If those credits are still held on any account, they are blocked for any transfers. These CERs and ERUs may be held in accounts in the Austrian Kyoto-Registry (i.e. accounts beginning with AT), but since 19 November 2015, the end of the true-up period for the 1st commitment period, CERs and ERUs for emission reductions from the period 2008-2012 may not be transferred to other countries anymore (i.e. they may only be transferred to other accounts that begin with AT).

Exchange of project credits

In the 1st and 2nd trading period it was possible to directly use credits (CERs and ERUs) to cover verified emissions. In order to use CERs and ERUs to cover emissions from the 2013-2020 trading period they need to be exchanged for EU allowances. Credits for emission reductions from the period 2008-2012 could only be exchanged in the Union Registry until 31 March 2015. Project credits for emission reductions in the period 2013-2020 from projects that were registered before 2013 or from projects that have started since 1. January 2013 in least developed countries may be exchanged in the Union Registry for EU allowances until 31 December 2020. For the exchange the above mentioned quantitative limits apply.

Only operators and aircraft operators may exchange CERs and ERUs for EU allowances. For holders of personal holding or trading accounts it is not possible to exchange project credits for allowances.

Three steps are necessary to carry out an exchange:

A prepresentative of an operator or aircraft operator holding account proposes an exchange of CERs and ERUs in the Union Registry.

The Central Administrator (at EU level) checks if the project credits proposed for the transfer comply with the rules relating to the use of project credits (see quantitative and qualitative rules). Once compliance is ensured, the Central Administrator approves the exchange.

In exchange for the transferred CERs and ERUs, the Central Administrator transfers the same amount of EU allowances for stationary plants to the respective operator holding account. For aircraft operators the Central Administrator transfers the same amount of aviation certificates to the respective aircraft operator holding account.